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Future of Cryptocurrency Mining

September 11, 2023

Summary

The blockchain industry is evolving daily due to the increasing demand for digital assets. Cryptocurrency mining is practised worldwide in which a miner performs certain calculations to verify the transaction. This operation utilizes sophisticated hardware that helps you find cryptocurrencies and keeps going after that. Mining cryptocurrencies has gained momentum and become more productive, readily available, and sustaining. In the market, bitcoins are viewed as a possible breakthrough. It’s because cryptocurrency mining has advanced significantly since Bitcoin’s launch. The fact that mining also harms the environment and consumes a lot of electricity is another facet of the industry. Read this blog till the very end as we examine the evolution of cryptocurrency mining, challenges faced by the miner, innovations, difficulties associated with mining, how these are solved, and the future of cryptocurrency mining.

Table of Contents

    What is Cryptocurrency Mining?

    Cryptocurrencies also need to be mined, much like printing devices create traditional currency. The mining method is entirely decentralized to ensure cryptocurrencies’ vital network integrity and safety. Blockchain is the subject matter of cryptocurrencies. A blockchain is said to operate when a new block is added to an existing block to cater to additional transactions. The encrypted in-built features ensure that previous transactions can’t be changed or reversed by anyone, giving cryptocurrencies the quality of immutability. A reward is given to the user who adds a block, and the amount of the award is determined by the number of blocks mined by the miner. Adding a new block requires a lot of computer power which can be done using the computing devices only. Crypto mining hardware or nodes are the devices that are utilized to add previously mined blocks. You must buy crypto mining hardware from a trusted source, so the output delivered cannot be compromised.

    Evolution of Cryptocurrency Miners

    A cryptocurrency network’s success depends upon the mining hardware, which determines whether miners can perform what they do, essentially performing the computations required to create blocks containing transactions on the Blockchain. There has been a great evolution seen over time in the miners. However, let’s look at the mining hardware types and what led to their evolution. As the difficulty in mining arose, the need for new hardware miners increased. This demand for advanced miners led to the evolution of cryptocurrency miners.

    bitcoin mining difficulty chart
    Source: CoinDesk

    CPU Mining

    Earlier Bitcoin (BTC) miners were able to successfully mine blocks using the CPUs in their Personal Computers(PCs). It was feasible at those times since there were comparatively few miners present. As a result, the collective hash rate was substantially lower during the early stages of the Bitcoin network. Satoshi Nakamoto mined the initial Bitcoin block. Nakamoto didn’t require any specialized hardware to start the Bitcoin blockchain because he was the only miner on the network at the time. He managed to build Bitcoin blocks on a typical home computer. A higher mining success rate was achieved with less competition.

    GPU Mining

    The number of miners has increased along with a fascination with Blockchain and cryptocurrencies, which has led to increased rivalry for mining incentives. Due to this cycle, most miners of large-cap cryptocurrencies have switched from utilizing CPUs to employing graphics processing units (GPUs), as these systems can produce high hash power compared to CPUs. In 2010, the initial GPU mining software was made available. Apart from being far more rapid and productive than CPUs, GPUs also have some versatility in that they can mine several cryptocurrencies on several blockchains using different mining algorithms.

    ASIC Mining

    The third biggest advancement or evolution in cryptocurrency mining was the introduction of Application Specific Integrated Chip(ASIC) miners to the industry. In contrast to CPUs and GPUs, these gadgets were made specifically to mine Bitcoin from the start. It meant that every piece of hardware and software in these ASIC miners was already pre-designed and tuned to perform the specific computations required to generate new Bitcoin blocks. The first ASIC miner was introduced in 2012, offering a competitive processing power far greater than GPUs. ASIC mining power is typically measured in Terahashes per second (th/s), but GPU processing capacity is typically measured in megahertz (mh/s). These miners are far more efficient than any other type of miner and are used worldwide for impeccable results.

    Challenges to Cryptocurrency Mining

    With the advancements and evolution of cryptocurrency mining, there are a few challenges as well. These are the main challenges encountered by cryptocurrency mining are:

    1. High Cost

    Cryptocurrency mining is expensive because electricity is needed to run the mining hardware. Along with it, maintenance is required regularly. It requires a miner to spend plenty of money, which discards the cost-efficient nature of cryptocurrency mining. Bitcoin mining is becoming highly competitive due to great return rewards, attracting more people into mining activity. Miners must invest more computer power into their mining operations because of the growing competition and decreasing supplies. A single block or currency requires a lot of energy to mine, which makes it expensive because each miner must pay their electricity costs.

    2. Cryptojacking

    A cybercrime known as “crypto-jacking” involves attackers using people’s equipment to mine cryptocurrency. Profit is the motivation, as it is in many additional means of cybercrime, but unlike other threats, this one is made to remain fully hidden from the target. Cryptocurrency mining can be extremely profitable, but doing so is difficult without the resources to pay for high overhead. The illegal form of crypto mining, known as crypto-jacking, provides a quick, efficient, and cost-effective means to produce valuable currencies. Devices are hacked by hackers who then install crypto-jacking programs. The harmful software operates silently in the background, stealing from cryptocurrency wallets or mining for new ones. The unaware victims use their gadgets normally. However, they can experience lags or decreased performance.

    3. Environmental Impact

    Cryptocurrency mining has become one of the major contributors to the deterioration of the environment. As specialized mining hardware is required to create new blocks through cryptographic computations, it consumes much energy and electricity. Although coal, as well as other fossil fuels, are presently a key source of electricity around the globe, it is also true that burning coal contributes significantly to the rising risks of climate change as it emits carbon dioxide. Mining for cryptocurrencies has many environmental effects besides carbon dioxide pollutants. Countless amounts of electronic garbage produced through mining also contribute to a major depletion of the environment.

    Sustainable Cryptocurrency Mining

    The media below depicts the graph of the countries utilizing a sustainable energy mix.

    sustainable power mix - bitcoin mining vs countries

    Source: Bitcoin Mining Council

    Although the crypto mining operation is causing many problems, the concerned companies have also found a way to eliminate these problems. Everybody’s concern was mainly drawn upon the electricity consumption and environmental impact. Hence, to resolve that, another solution is introduced in the present times, which is sustainable or green cryptocurrency mining. Although it is correct that cryptocurrency mining mechanisms use sustainable resources and power to increase productivity, the amount of such renewable energy and resources consumed depends greatly on the type of mining mechanism utilized by the miners. As a result of evolving mining processes, sustainable solutions are being introduced.

    Future Outlook of Cryptocurrency Mining

    Though advancements have taken place to a great extent already in cryptocurrency, a few things can visibly be seen to shape the future of cryptocurrency. Sustainable crypto mining is one of the things. As laws and other authoritative bodies emphasize the prevention of the environment more, a massive surge will be seen in miners going all green in the future. Another development would be the merging of AI and Blockchain together to provide a robust technological solution. Additionally, users can see rising interest in cloud mining for cryptocurrencies. In the future, people can mine cryptocurrencies without buying or setting up computing devices. Also, it will increase the effectiveness and profitability of cryptocurrency mining.

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    Conclusion

    Cryptocurrency mining is still an essential procedure in the constantly changing blockchain industry. The industry has undergone tremendous development, moving from early CPU mining to specialized ASIC miners to meet the increasing demand. The high cost of mining due to advanced hardware and electricity usage and the rise of hacking activities that take advantage of mining profitability are obstacles that must be overcome. Another issue is environmental impact, as energy-intensive mining contributes to electronic waste and carbon emissions. The solution can be provided by encouraging sustainable practices and renewable energy through trends like “green mining.” The combination of Blockchain and AI holds promise for the future, and cloud mining will make mining more accessible and efficient.

    FAQs

    • Why is cryptocurrency mining important?

      Cryptocurrency mining is crucial for preserving the confidentiality and reliability of the entire blockchain network. The development of new blocks, decentralization, and transparency may all be accomplished with the aid of bitcoin mining.

    • What is the effect of crypto-jacking on cryptocurrency mining?

      Cryptojacking attacks the miner’s data by secretly keeping a watch on their activities with the help of a harmful program running in the background. It causes the criminals to steal the transaction data, leading to the deterioration of the mining hardware.

    • How did the crypto-mining hardware evolve?

      The mining operation was performed during the early stages using only a CPU and PC, as there was no competition. With the increased awareness of crypto mining activities amongst people, the difficulty level increased, and the CPUs mining capability decreased, leading to GPU’s evolution. As Bitcoin mining’s popularity increased among enthusiasts, even the GPUs were no longer producing the efficient results that led to the production of ASIC miners.

    • Why is sustainable mining brought into the bigger picture in the blockchain field?

      The environment is experiencing extreme degradation due to the increased cryptocurrency mining practices that have drawn the attention of everyone around the world. It caused sustainable mining to come into a bright picture, so crypto mining and the environment cannot be compromised.

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